Concept 3 Illustrative Program Financial Analysis Report
Transcript of Concept 3 Illustrative Program Financial Analysis Report
Concept 3 Illustrative Program
Financial Analysis Report
Prepared For:
Atlanta Transit Planning Board
Prepared By:
Sharon Greene + Associates
In Association with:
Jordan, Jones & Goulding
November 2008
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Table of Contents
1. INTRODUCTION ........................................................................................................ 1
1.1 Purpose of the Financial Report ................................................................................................. 1
1.2 Background ........................................................................................................................................ 1
1.2.1 Transit Planning Board ............................................................................................................................. 2
1.3 Description of the Remainder of the Report .......................................................................... 3
2. COST AND REVENUE FOR EXISTING TRANSIT SERVICES AND CONCEPT 3 .................... 4
2.1 Existing Regional Transit System Operating Costs and Revenues ................................. 4
2.1.1 Annual Operating and Maintenance Costs ...................................................................................... 4
2.1.2 Annual Revenues for Operating and Maintenance .................................................................... 4
2.1.3 Annual Capital Costs ....................................................................................................................... 5
2.1.4 Summary of Capital Revenue Assumptions ............................................................................ 5
2.2 Concept 3 Program .......................................................................................................................... 7
2.2.1 Concept 3 Capital Costs ............................................................................................................... 13
2.3 Concept 3 Operating and Maintenance Cost Estimates ................................................... 19
3. PRELIMINARY FINANCIAL PLAN ............................................................................... 22
3.1 Fare Revenue .................................................................................................................................. 22
3.2 Potential Regional Sales Tax ..................................................................................................... 22
3.3 Additional Potential Revenue Sources .................................................................................. 26
3.3.1 State Participation ........................................................................................................................ 26
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3.3.2 Federal Participation................................................................................................................... 26
3.4 Potential Debt Financing ............................................................................................................ 28
4. SENSITIVITY TESTS .................................................................................................. 29
4.1 Sensitivity Test: Cost Increases................................................................................................ 29
4.1.1 Increased Cost Escalation Rate ................................................................................................ 29
4.1.2 Sensitivity Test: Increased Cost Escalation Rates with Commensurate Reductions
in Sales Tax Growth Rates ........................................................................................................................ 30
4.2 Sensitivity Test: State and Federal Funding Participation ............................................ 32
4.2.1 Increased State Revenue ............................................................................................................ 32
4.2.2 Reduced FTA New Starts Funding ........................................................................................... 32
4.3 Sensitivity Test: Changes in Bond Interest Rates .............................................................. 33
4.4 Sensitivity Tests Summary Results ........................................................................................ 34
5. PUBLIC-PRIVATE-PARTNERSHIPS ............................................................................. 35
5.1 Opportunities for Public-Private Partnerships in the Concept 3 Program.............. 39
6. KEY FINDINGS ......................................................................................................... 40
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Table of Figures
Figure 1: Existing Costs and Revenues .................................................................................................. 7
Figure 2: Concept 3 Map .......................................................................................................................... 12
Figure 3: Fast Tracks Costs vs. Remainder of the Concept 3 Program (2008 dollars, in millions) ......................................................................................................................................................... 13
Figure 4: Cost by Concept 3 Program Component (in millions) .............................................. 15
Figure 5: Percent of Costs by Program Component ...................................................................... 15
Figure 6: Total Cost By Mode: 2008 dollars and YOE dollars (in millions).......................... 17
Figure 7: Annual Operating and Capital Costs and Existing Revenues .................................. 21
Figure 8: Potential Revenue from Local Sources............................................................................ 23
Figure 9: Sales Tax Levels Compared to Concept 3 Costs ........................................................... 24
Figure 10: Annual Existing and Concept 3 Costs and Proposed Region-Wide Sales Tax 25
Figure 11: Annual Costs, Existing Revenues and Potential Revenues ................................... 27
Figure 12: Annual Costs, Existing and Potential Revenue, and Debt Financing ................. 28
Figure 13: Total Bonds Issued: Cost Growth Increase ................................................................. 30
Figure 14: Total Bonds Issued: Cost Increase and Sales Tax Revenue Reduction............. 31
Figure 15: Sensitivity Test: Grant Revenue ...................................................................................... 33
Figure 16: Sensitivity Tests: Changes in Bond Interest Rates ................................................... 34
Figure 17: Sensitivity Tests Summary Results ................................................................................ 35
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Table of Tables
Table 1: Concept 3 Costs (2008 dollars, in millions) .................................................................... 14
Table 2: Assumed Implementation Schedules By Mode (in months) .................................... 16
Table 3: Comparison of Concept 3 Costs – 2008 Dollars vs YOE Dollars .............................. 18
Table 4: Annual O&M Costs by Implementation Phase ............................................................... 20
Table 5: Concept 3 Sources and Uses of Funds Summary .......................................................... 42
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1. Introduction
1.1 Purpose of the Financial Report
The purpose of this report is to summarize the results of the financial analysis of the
Regional Transit Vision Plan (Concept 3) developed by the Transit Planning Board
(TPB). The objective of the financial analysis is to identify potential revenues sources
and levels of participation that could be considered to implement Concept 3 by 2030.
The analysis includes a review of projected costs and revenues for the Atlanta
region’s existing transit services; estimated costs for Concept 3; and a preliminary
financial plan reflecting several local, state, and federal funding sources and debt
issuance assumptions. The report also provides the results of a series of sensitivity
tests designed to identify the impact of cost increases, alternative levels of revenue,
and changes in interest rates. Finally, a discussion is provided of the potential use of
public-private-partnerships as a financing tool to assist in implementing Concept 3.
1.2 Background
The Atlanta region’s existing transit services are provided by the Metropolitan Atlanta
Rapid Transit Authority (MARTA) and six independent fixed-route bus operators. .
Currently there is no unified body that provides oversight or coordinates funding for
the region. Additionally, with the exception of the Georgia Regional Transportation
Authority (GRTA), each operator has its own geographic boundaries, fare system,
funding sources, and governing board.
The lack of a unified institutional arrangement results in numerous issues that
significantly impair mobility and accessibility throughout the region:
The number of operators and their geographical restrictions make coordinating
efficient routes and schedules challenging or even impossible;
Riders making cross-jurisdictional trips must transfer between operators, forcing
them to maintain multiple fare media;
The independent regional transit entities compete against one another for
increasingly scarce State and federal funding; and
Regional funding and governance are inadequate to implement the long-range
transit vision from the adopted Regional Transportation Plan (RTP).
The Atlanta Regional Commission’s 2005 Regional Transit Institutional Analysis
recommended a framework for the establishment of a new transit board made up of
public transportation decision makers to address the region’s institutional transit
problems. This framework led to the creation of the Transit Planning Board.
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1.2.1 Transit Planning Board
In December 2005 and January 2006, the governing boards of the Atlanta Regional
Commission (ARC), GRTA, and Metropolitan Atlanta Rapid Transit Authority
(MARTA) approved a joint resolution to establish the TPB as a transit planning body
for the Atlanta Region. The TPB’s first meeting was held on February 16, 2006 and
its work plan was adopted on April 20, 2006. The goal of TPB’s work plan, which is
scheduled to be completed by December 31, 2008, was to create a partnership
among the region’s transit providers that will lead to the establishment and
maintenance of a seamless, integrated transit network for the Atlanta region.
Specifically, TPB was charged with:
Developing a regional transit plan which includes a comprehensive financial plan;
Working to improve regional service coordination, including integrating fares,
marketing and customer information;
Measuring system performance; and
Advocating for increased federal funding for regional transit.
The TPB includes representatives from the three major member agencies (ARC,
GRTA, and MARTA), local governments, gubernatorial appointees and the Georgia
Department of Transportation (GDOT). TPB Board members includes the Mayor of
the City of Atlanta, the DeKalb County Chief Executive Officer, the County
Commission Chairs of Cherokee, Clayton, Cobb, Douglas, Fayette, Fulton, Gwinnett,
Henry, Rockdale, and Spalding Counties, the Board Chairs of GDOT, GRTA and
MARTA, the General Manager of MARTA, and three Gubernatorial Appointees.
The focus of this report is addressing the comprehensive financial plan for the
regional transit plan (Concept 3) component of the TPB’s work plan.
1.2.2 Regional Transit Plan
Through an extensive process of technical analysis and public outreach, the TPB
developed the region’s long range transit plan, Concept 3. Technical analysis
associated with Concept 3 identified the positive impacts related to travel time,
safety, and accessibility to and connectivity between major activity centers that
would result with the implementation of the Concept 3 program of projects.
Throughout the development of Concept 3, TPB staff provided extensive
opportunities for public input which included individual meetings with stakeholder
groups, public hearings throughout the region, an online survey, and other outreach
activities. As a result of the technical and outreach activities, Concept 3 was adopted
as the consensus vision and guiding document for future transit investment in the
Atlanta region and is the transit element of the Aspirations Plan of ARC’s 2030 RTP /
Transportation Improvement Program (TIP).
Concept 3 is a comprehensive, interconnected, multimodal transit network designed
to provide seamless regional and localized travel opportunities. The plan includes a
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significant rail component to ensure reliable travel times in the region’s most heavily
travelled corridors and between major activity centers. An expanded bus network is
also included to expand regional transit access and provide connections to the
regional transit network.
Projects identified in Concept 3 were developed based on a combination of technical
analysis and guiding principles. The technical analysis reflects use of ARC’s regional
travel demand model to match transit modes and capacities to projected corridor
demands. Based on the travel demand model results, Concept 3 includes a
multimodal mix of MARTA heavy rail extensions; light rail (LRT), streetcar, and,
commuter rail lines; freeway and arterial bus rapid transit (BRT) lines; express and
intercity regional bus service and expanded local and activity center service.
Combined with the technical analysis, the guiding principles included:
The projects will be realistic and implementable;
The program of projects will constitute a region-wide program that essentially
includes “something for everyone”;
The full system will be completed and in operation by the end of 2030;
A new funding stream will allow construction planning to commence on
January 1, 2011;
The projects in the region’s current Transportation Improvement Plan (TIP) are
consistent with Concept 3 and remain as programmed; and
The region-wide program will include an initial Fast Tracks Early Action Plan that can
be implemented by 2015. The objective of the Fast Tracks Early Action Plan is to
deliver projects in multiple corridors (“something for everyone”) by 2015. Fast Tracks
includes five to seven major rail projects identified through travel demand model
results that are relatively easy to implement (i.e. no river crossings). Additionally, the
financial plan assumes that Fast Tracks projected will be implemented using non-
federal funds. Further details on Concept 3 and the Fast Tracks plan are provided in
Section 2.
1.3 Description of the Remainder of the Report
The remainder of the report is organized as follows: Section 2 provides background
information on costs and revenues for the region’s existing transit systems and
describes the Concept 3 components and associated costs. Section 3 summarizes
the key assumptions and development of the potential plan to finance the
implementation of Concept 3 by 2030. Section 4 summarizes the results of a series
of sensitivity tests to analyze the impact of costs increases, changes in revenue
levels, and changes in interest rates for bond issues. Section 5 describes the use of
public-private-partnership as a potential tool to facilitate implementation of some of
the higher performing Concept 3 projects; and Section 6 provides the key
conclusions.
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2. Cost and Revenue for Existing Transit Services and Concept 3
The financial plan combines the costs and revenues projected to operate the region’s
existing transit systems and the capital costs to enhance and maintain them in a state of
good repair with the capital and operations and maintenance costs and revenues projected
for Concept 3. The following sections summarize the input assumptions to the financial plan
with regard to the existing transit systems’ costs and revenues and development of the
Concept 3 components and their respective operating and capital cost and revenue
estimates.
2.1 Existing Regional Transit System Operating Costs and Revenues
The first step in developing the Concept 3 financial plan was to project costs and
revenues for the existing services provided by the region’s transit providers. Working
with staff from the partner agencies, TPB staff obtained the following annual operating
and capital (state of good repair and capital improvement program) cost and revenue
estimates. Figure 1 summarizes the projected annual cost and revenue levels over the
2009 to 2030 period.
2.1.1 Annual Operating and Maintenance Costs
Annual operating and maintenance (O&M) costs were obtained from MARTA, GRTA,
Cobb County, Clayton County and Gwinnet County. Annual operating costs in the
financial plan reflect both steady state service and regional service enhancement
projects not included in Concept 3.
Over the 2009 to 2030 period, the region’s existing annual operating costs are
projected to grow 6 percent per year, from $443.0 million to $1.5 billion. Total
operating costs over this time period are $21.3 billion.
2.1.2 Annual Revenues for Operating and Maintenance
Annual estimates of revenues for O&M of existing regional transit services were also
derived from information provided by MARTA, GRTA, Cobb County, Clayton County
and Gwinnet County. The six main existing sources of funding used for O&M of the
existing services and their assumed annual rates of growth consist of the following:
Existing MARTA sales tax (of which 50 percent is assumed available for
operations): 4 percent
Fare revenue
o MARTA: 4 percent;
o GRTA: 7 percent;
o Cobb County: 6 percent;
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o Clayton County: 8 percent; and
o Gwinnet County: 7 percent.
Region’s FTA Section 5307: 2 percent
Lease income: 3 percent
Transit oriented development income: 3 percent; and
Lease to service: constant at 2009 level through 2030.
Based on these assumptions, the existing revenue sources for operation and
maintenance of the existing regional transit services are projected to generate a total
of $13.9 billion over the 2009 to 2030 period, growing from $353.4 million in 2009 to
$923.9 in 2030.
2.1.3 Annual Capital Costs
The annual capital costs associated with existing regional transit services include the
costs for state of good repair improvements as well as MARTA’s capital
improvement program (CIP) projects that are not included in Concept 3. State of
good repair and CIP costs for MARTA reflect the agency’s current 10-year plan
assumptions through 2018 with costs assumed to grow at 4 percent annually
through 2030. MARTA’s capital costs are projected to total $6.2 billion over the 2009
to 2030 period. For the remaining regional transit systems, the financial plan
assumes a total of $200 million in state of good repair improvements distributed
evenly ($9.1 million per year) over the 2009 to 2030.
Annual costs also include annual repayment of MARTA’s existing finance
mechanisms: annual debt service payments for previous bond issues and interest
payments for commercial paper. Based on data provide by MARTA staff, over the
2009 to 2030 period, debt repayment for prior bond issues will decrease from
approximately $132 million a year to $61 million year in the out-years of the financial
plan. Interest payments on commercial paper are assumed to be $16 million per
year as the financial plan assumes the agency will maintain a $400 million per year
commercial paper balance over the 2009 to 2030 period based on MARTA’s historic
trends. In total, MARTA’s debt service payments are projected to total $2.5 billion.
2.1.4 Summary of Capital Revenue Assumptions
The following capital revenue assumptions were developed in cooperation with TPB,
MARTA, and the regional partners. The financial plan includes the major sources
listed below, with the following assumptions for each source:
MARTA’s existing sales tax (of which 50 percent is assumed available for
capital projects): revenues projected to grow 4 percent annually;
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FTA Section 5309, CMAQ and STP funds: the 14-county region is assumed
to receive all of the region’s FTA 5307, FTA 5309, STP, and CMAQ regional
transit funds, in addition to funds currently allocated to MARTA. Based on
MARTA’s projections, revenue from this source is assumed to grow 4 percent
annually;
Transportation Improvement Program (TIP) programmed funds: A number of
the projects identified in the Fast Track’s Early Action Plan are currently
incorporated in the region’s TIP. The financial plan assumes these funds are
available for Fast Track projects in 2009 and 2010;
Funding for state of good repair and capital improvement program projects:
Based on a review of MARTA’s recent annual data reported to the National
Transit Database (NTD), the financial plan assumes that state of good repair
and capital improvement projects will be funded through a combination of
local, state and federal sources. Specifically, the plan assumes that federal
discretionary revenue will provide 20 percent funding; the State will provide 1
percent funding; and local revenue will provide the remaining 79 percent;
Beltline Tax Allocation District (TAD): The financial plan assumes that the
Beltline TAD will generate revenue to provide 50 percent of the capital costs
for the Beltline Streetcar project; and
Net operating revenue: The financial plan assumes that if surplus operating
revenue is available after accounting for all operating expense, these funds
will be available for payment of capital costs and debt service.
Based on the above assumptions, the region’s existing capital revenue is projected to
generate a total of $13.1 billion over the 2009 to 2030 period, averaging approximately
$623.8 million per year.
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Figure 1: Existing Costs and Revenues
Note: Existing regional system revenues reflect combined annual operating and capital revenue estimates.
Additionally, the surplus revenue shown in 2009 and 2010 reflect existing revenue for Fast Track projects that
are currently in the TIP. Costs associated with these revenues are show in Figure 8.
2.2 Concept 3 Program
As stated earlier, the multimodal projects included in Concept 3 were identified in part by
using ARC’s regional travel demand model to match modes and transit capacities to
projected corridor demands. Based on the travel demand model results, Concept 3 reflects
a mix of MARTA heavy rail extensions; LRT, streetcar, and commuter rail lines; freeway and
arterial BRT lines; express and intercity regional bus service and expanded local and activity
center service. The program components are described in greater detail below. A map of
Concept 3 is provided following the program component descriptions.
Heavy Rail: Due to the intense volumes of regional travel and the corresponding need for
high capacity transit service, the following projects were identified for extensions to
MARTA’s existing heavy rail system:
Northeast Line rail extension to Norcross;
West Line rail extension to I-285/I-20; and
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Southeast branch from East Point to the proposed Southern Crescent Transportation
Center.
All three projects expand high capacity radial transit service to / from the Downtown and
Midtown travel markets. The Northeast Line extension provides expanded high capacity
transit service to the Gwinnett Village/Peachtree Corners activity centers. The Southeast
branch provides expanded high capacity transit service to the Airport activity center via a
proposed Airport-Southern Crescent transit connection.
Commuter Rail: Six commuter rail lines are included in Concept 3 to provide a long
distance, medium to high capacity radial transit service connection between the low density
suburban and exurban areas and the Downtown and Midtown travel markets. The lines
include:
Athens to Atlanta
Griffin to Atlanta
Senoia to Atlanta
Bremen to Atlanta
Gainesville to Atlanta
Madison to Atlanta
The Senoia, Bremen and Madison lines are proposed to provide peak period service only. In
response to higher ridership demands, all-day rail service is proposed on the Athens,
Gainesville and Griffin lines (including reverse peak direction service). Additionally, the
Griffin and Athens lines could be interlined to provide a seamless, one-seat ride (no
transfers) between the two corridors. Through-routing the three peak period lines to the
Southern Crescent Transportation Center could also provide airport service via the
proposed Airport-Southern Crescent transit connection.
Light Rail and Streetcar: Nine corridors were identified for high capacity regional LRT
service (referred to as high capacity regional rail in the remaining sections of the report).
LRT provides the speed, passenger capacity flexibility (ability to add/subtract cars based on
passenger demand) and operating environment flexibility (can operate within its own right-
of-way or on arterial and local streets) to provide service for long distance trips as well as
activity center circulation within the urban core. The implementation plan calls for
implementing all-day service in the following corridors through multiple construction phases:
NW / I-75 Corridor
I-575 Corridor
North I-285 Corridor
GA 400 Corridor
NE / I-85 Corridor
Downtown Connection (Northside / 17th Street to COP)
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I-20 East Corridor
Armour Decatur via EmoryAdditionally, four streetcar projects are proposed to provide
medium to high capacity circulation and distribution services with Atlanta’s Central Core.
Streetcar projects include:
Atlanta Beltline
Peachtree Streetcar
Marietta Boulevard/North/Ponce Streetcar
Edgewood Auburn Avenue Streetcar
Both the Atlanta Beltline and Peachtree Streetcar projects are projected to be implemented
in multiple phases.
Freeway Bus Rapid Transit: In order to provide medium to high capacity transit along the
key highway corridors where rail service does not exist or is not planned, several Freeway
BRT projects are proposed. The BRT service is expected to operate in either High
Occupancy Vehicle (HOV) lanes / High Occupancy Toll (HOT) lanes or within exclusive
lanes. Freeway BRT service is considered to be a significant improvement over express
bus service that is required to shares travel lane with regular traffic. Additionally, frequent
service, enhanced customer amenities and capital improvements that also improve travel
time reliability will be included.
Freeway BRT has the advantage of serving high demand corridors with variable capacity
that can respond to changing demand levels and to also provide the flexibility to operate
buses off the BRT facility for circulation and distribution within nearby activity centers and
residential areas. Freeway BRT projects include:
I-285 West – I-20 West to Cumberland
I-285 East – I-20 East to Doraville
I-75 South – Southern Crescent to McDonough
I-20 West – H.E. Holmes to Fulton Industrial Boulevard
Arterial Rapid Transit Projects: Arterial rapid transit projects are projected to provide
medium capacity transit service along key regional arterial corridors. The intent of arterial
rapid transit projects is to provide frequent transit service (e.g., 15-minute frequencies or
better) with limited stops, enhanced passenger amenities and other low cost capital
improvements that will improve the reliability of transit travel times (e.g., partial signal pre-
emption, queue jumper lanes, and bus-only lanes where feasible). Arterial rapid transit
corridors include:
Buford Highway: Pleasant Hill to Lindbergh
Fulton Industrial Blvd: I-20 to Camp Creek Parkway
Piedmont Rd/Roswell Road: Lindbergh to Alpharetta
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D.L. Hollowell Parkway: North Avenue to I-285
Campbellton Road: Camp Creek Parkway to Oakland City
Pryor/Capital Corridor: Downtown to Lakewood
Moreland Avenue: Emory to Thomasville
Jonesboro Rd/McDonough Road Corridor: Fayetteville to McDonough
Candler Road / Flat Shoals Road: Snapfinger Road to Decatur
S. Fulton Parkway: College Park to Hwy 154
SR 16: Newnan to I-75
SR 34/54 Newnan to Southlake via Fayetteville
SR 85: Fayetteville to SCTC
US 41: SCTC/Griffin
Regional Suburban Bus Service: Concept 3 includes a network of regional suburban bus
routes to provide limited stop suburb-to-suburb bus service. Service levels will be tailored
to demand, but it is expected that this service will operate on 30 to 60 minute frequencies.
Regional suburban bus services include:
Cumming / Conyers / McDonough / Hampton
Cumming to Lithonia / Stonecrest / Stockbridge / Jonesboro
Acworth / Norcross
Waleska / Canton / Norcross
Dallas to Airport
Union City / Jonesboro / McDonough
Cumming / Norcross
Union City to Morrow
Jonesboro to Lawrenceville
Hiram to Cumberland
Acworth / Airport
Union City / Palmetto / Newnan
Douglasville to Acworth / SR 92
Support Facilities: Concept 3 includes a number of system-wide support facilities that will
be needed to support multiple projects. These facilities include the following:
15 non-rail park and ride facilities;
15 non-rail transit centers;
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6 LRT/Streetcar maintenance facilities; and
8 bus maintenance facilities.
Express Bus Service: Concept 3 includes an extensive express bus network in corridors
where rail and BRT service is not proposed and where travel demand-sheds extend
beyond the proposed rail and freeway alignments. Express bus corridors include:
I-75 North – north of Town Center Mall
I-20 West – west of I-285
I-285 Southwest – from I-20 West to the Airport
I-285 Southeast – from I-20 East to the Airport
I-85 South – from Newnan to College Park
SR 316 – east of Lawrenceville
I-675 – south of I-285
I-985 – north of I-85
I-85 North – north of Gwinnett Place Mall
GA 400 – north of Windward Parkway
Transit Ways: Given the changing nature of development patterns and the clear desire to
provide high-capacity transit service where there is a fit, the TPB identified Transit Ways as
areas within the metro region where there is a good likelihood for greater development than
currently captured by the ARC model. These areas are currently identified as Southwest
Fulton; an Airport Circulator serving Clayton County; Southern metro from Newnan to
McDonough, U.S. 78 West Corridor and U.S. 29 Corridor from Union City to Newnan.
As high capacity transit in these areas have not been studied, they are denoted with a
hatched pink line on the Figure 2 Concept 3 map as future study areas until development
patterns become clearer. Therefore, costs noted in this report do not include any costing for
these potential transit locations.
Expanded Local and Activity Center Bus Service: To complement Concept 3’s medium
and high capacity transit services, an investment is also needed in local and activity center
bus service. This service is a critical component to provide mobility for shorter trips and
provide connections to the regional transit network. Concept 3 assumes new local bus
service in counties that currently do not have service (Douglas and Henry Counties) and
expanded local bus service in counties with existing transit services (Clayton and Gwinnett
Counties). Bus circulator routes are also proposed in activity centers as a means to
distribute trips from regional rail and bus lines to destinations within activity centers.
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Figure 2: Concept 3 Map
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2.2.1 Concept 3 Capital Costs
Order of magnitude capital costs were developed using a combination of existing
local information and national averages. Capital cost estimates were developed
based on existing planning documents from the various partner agencies. When
planning documents were not able to provide a basis for a project’s cost estimate,
national cost per route mile averages were used to develop the order of magnitude
estimates.
As stated earlier, implementation of Concept 3 was divided into two phases: the Fast
Tracks Early Action Plan (projects completed by 2015 and in operation by 2016) and
the Remainder of the Concept 3 Program (projects in operation between 2017 and
2030). As shown in the Figure 3, the Fast Tracks Early Action Plan represents
approximately 13 percent of the total Concept 3 program capital costs. A detailed
description of the projects included in the Fast Tracks Early Action Plan is provided
in Appendix A.
Table 1 and Figures 4 and 5 below summarize the order of magnitude capital costs
estimates by mode for each implementation phase in current (2008) dollars. As
shown in the table and figures, modes with the ability to address the region’s highest
passenger capacity demands (heavy rail, high capacity regional rail, and commuter
rail) account for 71 percent of the Concept 3 total costs. Of these modes, high
capacity regional rail projects represent the largest share of project costs in both
implementation phases; followed by commuter rail projects. Additionally, all heavy
rail and Freeway BRT projects are assumed to be operational after 2016, although
construction on some projects will start prior to 2016. All regional suburban bus
services are planned to be implemented within the Fast Tracks period.
Figure 3: Fast Tracks Costs vs. Remainder of the Concept 3 Program
(2008 dollars, in millions)
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Table 1: Concept 3 Costs (2008 dollars, in millions)
Concept 3 Capital Costs
Fast Tracks 2008 $ Percent of Costs
Heavy Rail $0.0 0%
High Capacity Regional Rail $1,072.5 40%
Streetcar $390.0 15%
Commuter Rail $647.8 24%
Freeway BRT $0.0 0%
Arterial Rapid Bus $139.5 5%
Suburban Bus $110.0 4%
Support Facilities $292.0 11%
Total $2,651.8
Remainder of Concept 3 2008 $ Percent of Costs
Heavy Rail $1,985.0 11%
High Capacity Regional Rail $7,303.5 41%
Streetcar $1,247.5 7%
Commuter Rail $3,426.8 19%
Freeway BRT $2,263.0 13%
Arterial Rapid Bus $1,085.6 6%
Suburban Bus $0.0 0%
Support Facilities $388.0 2%
Total $17,699.3
Total Illustrative Program 2008 $ Percent of Costs
Heavy Rail $1,985.0 10%
High Capacity Regional Rail $8,376.0 41%
Streetcar $1,637.5 8%
Commuter Rail $4,074.6 20%
Freeway BRT $2,263.0 11%
Arterial Rapid Bus $1,225.1 6%
Suburban Bus $110.0 1%
Support Facilities $680.0 3%
Total $20,351.2
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Figure 4: Cost by Concept 3 Program Component (in millions)
Figure 5: Percent of Costs by Program Component
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To develop the financial plan and project cost in year of expenditure dollars, implementation
schedule assumptions were needed for the Fast Tracks Early Action Plan and the
Remainder of Concept 3. TPB staff worked with MARTA staff to develop project
development and implementation plan parameters for each mode. Table 2 summarizes the
estimated time assumed to implement the various modes.
Table 2: Assumed Implementation Schedules By Mode (in months)
Time in Months Heavy
Rail Regional Rail and Streetcar
Commuter Rail
Arterial BRT
Freeway BRT
Initiation Phase (Initial Planning) 24 20 16 12 24
Planning / Environmental Phase 24 20 16 6 8
Design Phase (includes 6 months procurement) 24 18 18 14 16
Implementation Phase 36 30 18 12 24
Commissioning and Close Out 12 8 8 6 6
TOTAL MONTHS 120 96 76 50 78
Additionally, the following implementation schedule assumptions were used for the support
facilities:
Non-rail park and ride facilities: 44 months
Non-rail transit centers: 44 months
LRT maintenance facilities: 24 months
Bus facilities: 52 months
TPB and MARTA staff developed a preliminary plan to implement Concept 3 based on the
schedules identified above and a preliminary prioritization of projects based on estimated
funding availability and the productivity of projects. Concept 3’s preliminary implementation
scheduled was then used as the basis for the projection of capital costs in year of
expenditure (YOE) dollars assuming an inflation rate of 4.0 percent per year. The projection
of costs and revenues in YOE dollars provides a better understanding of the financial impact
of funds that would need to be expended in the actual year of expenditure and the relative
effects of inflation on costs and revenues. More specifically, YOE dollar values are
computed by multiplying base year dollar values by the compounded escalation factor for
the year in which funds would be expended. For example, in YOE dollars, $1.00 in 2008 is
equivalent to $1.04 in 2009, using an inflation rate of 4.0 percent.
Figure 6 and Table 3 compare project costs in current year dollars (2008 dollars) to YOE
dollars. As shown in the figure and the table, the YOE cost estimates are significantly higher
due to the cost of time (implementation schedule and annual inflation rate). While
implementing projects on an accelerated schedule would reduce the YOE dollar costs, costs
need to be balanced relative to available funding. It is important to note that the
implementation plan used to develop the financial plan represents only one potential
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scenario. Additionally, project cost estimates will be refined and implementation schedules
will likely be adjusted. As a result, these costs should be considered a preliminary order of
magnitude estimate.
Figure 6: Total Cost By Mode: 2008 dollars and YOE dollars
(in millions)
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Table 3: Comparison of Concept 3 Costs – 2008 Dollars vs YOE Dollars
Summary of Concept 3 Capital Costs (2009 to 2030)
Fast Tracks 2008 $ YOE $
Heavy Rail $0.0 $0.0
Regional Rail $1,072.5 $1,303.1
Streetcar $390.0 $473.9
Commuter Rail $647.8 $729.6
Freeway BRT $0.0 $0.0
Arterial Rapid Bus $139.5 $276.3
Suburban Bus $110.0 $123.8
Support Facilities $292.0 $451.2
Total $2,651.8 $3,357.9
Remainder of Illustrative Program 2008 $ YOE $
Heavy Rail $1,985.0 $3,071.4
Regional Rail $7,303.5 $12,177.2
Streetcar $1,247.5 $2,013.1
Commuter Rail $3,426.8 $7,067.7
Freeway BRT $2,263.0 $2,946.4
Arterial Rapid Bus $1,085.6 $1,878.7
Suburban Bus $0.0 $0.0
Support Facilities $388.0 $494.2
Total $17,699.3 $29,648.7
Total Illustrative Program 2008 $ YOE $
Heavy Rail $1,985.0 $3,071.4
Regional Rail $8,376.0 $13,480.3
Streetcar $1,637.5 $2,487.0
Commuter Rail $4,074.6 $7,797.4
Freeway BRT $2,263.0 $2,946.4
Arterial Rapid Bus $1,225.1 $2,155.0
Suburban Bus $110.0 $123.8
Support Facilities $680.0 $945.3
Total $20,351.2 $33,006.6
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2.3 Concept 3 Operating and Maintenance Cost Estimates
Similar to capital costs, order of magnitude operating and maintenance (O&M) costs
estimates were developed using a combination of existing local information and
national averages as documented in the Atlanta Transit Planning Board Project
Prioritization Process report from August, 2007. Annual O&M costs were estimated
based on annual service hours by mode and a cost per hour estimate for each
mode. The costs per hour estimates are summarized below:
Bus: $90/bus-hour.
Streetcar: $175/train-hour for Beltline and $125/train-hour for other lines
LRT: $375/train-hour
Heavy Rail: $750/train-hour
Commuter Rail: $3,100/train-hour
Based on the cost per hour estimates and preliminary operating plans for each
project, Table 4 summarizes the total estimated O&M costs for the Concept 3
program. Over the 2009 to 2030, Concept 3 O&M costs are projected to total
approximately $9.1 billion, including implementation of additional hours and miles of
service and a 4 percent annual increase in the cost per service hour. In 2030 when
all projects are in operation, the annual O&M costs are estimated to be $1.2 billion.
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Table 4: Annual O&M Costs by Implementation Phase
Summary of Concept 3 Operating Costs
Fast Tracks YOE $
Heavy Rail $0.0
Regional Rail $1,107.9
Streetcar $412.7
Commuter Rail $409.6
Freeway BRT $419.9
Arterial Rapid Bus $0.0
Suburban Bus $1,565.8
Total $3,915.9
Remainder of Illustrative Program YOE $
Heavy Rail $137.3
Regional Rail $2,286.8
Streetcar $1,079.1
Commuter Rail $263.0
Freeway BRT $1,138.3
Arterial Rapid Bus $231.1
Suburban Bus $0.0
Total $5,135.4
Total Illustrative Program YOE $
Heavy Rail $137.3
Regional Rail $3,394.7
Streetcar $1,491.8
Commuter Rail $672.6
Freeway BRT $1,558.2
Arterial Rapid Bus $231.1
Suburban Bus $1,565.8
Total $9,051.3
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Figure 7 illustrates the distribution of annual capital and O&M costs for both the Existing
Regional System and Concept 3 assumed over the 2009 to 2030 period relative to annual
transit system revenues from existing sources. Concept 3 costs are distinguished between
the Fast Track Early Action Plan and the Remainder of the Program. The Concept 3 costs
are in addition to the annual capital and O&M costs for the Existing Regional System shown
previously in Figure 1.
Figure 7: Annual Operating and Capital Costs and Existing Revenues
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3. Preliminary Financial Plan
As illustrated in Figure 7 above, additional revenues will be required to implement, operate,
and maintain the Concept 3 long range transit vision in addition to the Existing Regional
Transit System. A combination of potential local, state, and federal revenue sources and
debt financing options were analyzed and considered in the context of a preliminary
financial plan that would allow Concept 3 to be implemented by 2030. The results of these
analyses are summarized below. The preliminary financial plan provides a base case for
sensitivity testing of alternate assumptions related to growth in costs, revenues, and interest
rates.
3.1 Fare Revenue
For the purposes of the financial plan it was assumed that all Concept 3 projects would
generate fare revenues sufficient to cover 25 percent of their operating costs, (fare box
recovery rate of 25 percent). This assumption was based on the following fare recovery
rates from the 2007 National Transit Database:
MARTA: bus: 27.4 percent, rail: 29.4 percent;
GRTA: 26.3 percent;
Cobb County Transit: 27.0 percent;
Gwinnett County Transit: 25.9 percent; and
Clayton County Transit: 30.5 percent.
Based on the 25 percent fare recovery assumption, over the 2009 to 2030 fares are
projected to generate $2.3 billion in revenue.
3.2 Potential Regional Sales Tax
As stated earlier, currently the largest transit funding source in the region is MARTA’s one-
cent transit sales tax. This sales tax is collected in Fulton and DeKalb Counties (existing
MARTA counties) and is projected to generate approximately $336.1 million in FY 2009. As
part of the TPB work plan, a review was conducted of other potential local revenue sources
that could provide funding for Concept 3. These sources included:
Gas tax
Annual vehicle registration
Motor vehicle excise tax
Expansion of a one-cent sales tax to the rest of the 14 counties
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Based on Georgia State University (GSU) projections of annual sales taxes, if the one-cent
sales tax was implemented in all 12 counties, in 2012 it would generate over $1.1 billion.
Figure 8 provides an order of magnitude comparison of the relative revenue generation of
the one-cent sales tax relative to the other three sources.
As shown in the figure, to generate the $1.0 billion annual level of funding equivalent to the
one-cent sales tax would require a gas tax of $0.35 per gallon; annual vehicle registration
fees of $300 per vehicle, and a motor vehicle excise tax of $1,750 assuming an average
value of $10,000. Based on this analysis, it was determined that the Concept 3 financial
plan should assume expansion of the one-cent sales tax as a key potential new local
revenue source to assist in the implementation of Concept 3.
Figure 8: Potential Revenue from Local Sources
During the development of the financial plan, questions arose regarding the geographic
extent of the potential sales tax, the percentage of the sales tax dedicated to transit, the
level of the sales tax rate, and how long the tax should remain in place. Figure 9 compares
the projected 2009 to 2030 total costs for the Existing Regional Transit System plus the Fast
Tracks portion of Concept 3 and the full Concept 3 program to the total sales tax revenue
estimated under the following implementation scenarios:
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Implementation of an equivalent half-cent or a one-cent sales tax in MARTA-eligible
counties (Clayton, Cobb and Gwinnett Counties);
Implementation of an equivalent half-cent or a one-cent sales tax in MARTA-eligible
counties plus an equivalent half-cent or a one-cent sales tax in MARTA existing
counties (Fulton and DeKalb Counties)
Implementation of an equivalent half-cent or a one-cent sales tax in 12 counties
(does not include MARTA existing counties) / Implementation of an equivalent half-
cent or a one-cent sales tax all 14 counties with 65% of tax going to transit; and
Implementation of an equivalent half-cent or a one-cent sales tax all 14 counties
It is important to note that the equivalent one-cent sales tax is defined as a currently
unknown revenue source(s) that would generate the same level of revenue as a one-cent
sales tax in that county.
Figure 9: Sales Tax Levels Compared to Concept 3 Costs
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As shown in the figure, only the full one-cent sales tax equivalent in all 14 counties would
generate enough revenue on its own to come close to potentially implement the Fast Tracks
portion of Concept 3. However, it still provides less than half of the revenue needed to fully
implement Concept 3. On this basis, the preliminary financial plan for the full Concept 3
program assumes that the following would be required:
Implementation of the full one-cent sales tax equivalent in 14, with collection
beginning January 1, 2011;
Continuation of the sales tax beyond 2030, without sunset, in order to finance the
implementation of the program over time through issuance and repayment of long
term debt;
Sales tax revenue used 50 percent for capital and 50 percent for operations.
Over the 2011 to 2030 period, the regional sales tax is projected to generate approximately
$33.2 billion in revenue, or approximately $1.6 billion per year. Figure 10 compares total
annual costs of Concept 3 and the Existing Regional System relative to total annual
revenues generated by existing sources, Concept 3 fare revenue and the region-wide one-
cent sales tax.
Figure 10: Annual Existing and Concept 3 Costs and Proposed Region-Wide Sales Tax
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3.3 Additional Potential Revenue Sources
As shown in Figure 10, beginning in 2014 there is a need for additional revenue from other
sources to cover annual costs to implement and operate the Existing Transit System plus
the Concept 3 program. To supplement potential revenue from a new one-cent sales tax,
consideration was given to State and federal funding participation. Inclusion of State funding
reflect experiences of other states and cities, such as Charlotte, North Carolina, that have
received significant State funding to implement major regional transit improvements.
The federal government’s primary grant program to support locally-planned, implemented,
and operated transit "guideway" capital investments, such as Concept 3’s heavy rail,
commuter rail and high capacity regional rail projects, is the Federal Transit Administration
(FTA) Section 5309 New Starts program. Projects applying for New Starts funding must
undergo evaluation by the FTA throughout the entire project development process. Projects
are evaluated according to a variety of criteria including mobility improvements,
environmental benefits, cost-effectiveness, operating efficiencies, transit supportive land
use, and local financial capacity. Although in recent years the Atlanta region has not been
actively involved in the New Starts program, there are a number of projects in Concept 3
that would be potentially be candidates for FTA New Starts funding.
3.3.1 State Participation
The preliminary financial plan for Concept 3 assumes two levels of State
participation in funding the capital costs of proposed regional transit service:
State grants are assumed to provide 10 percent funding for the heavy rail,
high capacity regional rail, commuter rail, and suburban bus components of
Concept 3. Over the 2011 to 2030 period, State revenue for these elements
of the Concept 3 program would total $2.4 billion, or approximately $120
million a year.
Since the Freeway BRT projects will be located within the existing highway
system, State and/or High Occupancy Toll (HOT) Lane funding was assumed
to cover 50 percent of these project costs. The reasoning for use of this
revenue source is that with the conversion of a general purpose lane to an
HOT lane there will be a reduction in travel capacity within the remaining
travel lanes and an associated need for increased transit service. The
Freeway BRT service would provide the capacity to meet the increased
transit demand. Over the 2013 to 2024 Freeway BRT implementation period,
State/HOT lane revenue would total $1.5 billion, which is approximately $125
million a year.
3.3.2 Federal Participation
The preliminary financial plan for Concept 3 assumes that:
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FTA New Starts funds will provide 20 percent of the total capital costs of the
heavy rail, high capacity regional rail, and commuter rail components of the
Concept 3 program;
The region would enter into a memorandum of understanding (MOU) with
FTA. Under the MOU, the 20 percent federal funding share would include the
cost of projects completed during the Fast Tracks Early Action Plan that are
planned to be 100 percent locally funded over the 2009 to 2015 period. This
strategy reflects a similar MOU that was recently implemented between the
Utah Transit Authority and FTA to implement the five-corridor FrontLines
2015 Program.
FTA New Starts funds would be received over the 2016 to 2030 period;
Over the 2016 to 2030 period, the financial plan projects receipt of $4.9 billion in
New Starts funds, or an average of $329 million per year.
Figure 11 compares total annual costs of Concept 3 and the Existing Regional
System relative to total annual revenues generated by the combination of State and
federal grants, existing sources, Concept 3 fare revenue and the region-wide one-
cent sales tax.
Figure 11: Annual Costs, Existing Revenues and Potential Revenues
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3.4 Potential Debt Financing
As shown in Figure 11, while the addition of State and federal grants narrows the annual
and total funding shortfall to implement Concept 3, shortfalls still exist. To address the
annual shortfalls, the financial plan assumes long-term bonds will be issued.
To maintain consistency with MARTA’s existing financing terms and conditions, the financial
plan incorporates MARTA’s current bond issuance assumptions (30-year term, 6 percent
interest rates, and interest-only payments the first ten years) and bond test requirements to
ensure that annual debt service payments do not exceed available funding resources. The
bond test requirements include:
Minimum annual ending balance of at least $20.0 million;
Maximum outstanding level of commercial paper of $400.0 million;
Minimum annual debt coverage ratio of 1.0 (ratio of bondable sales tax to debt service
payment); and
Maximum of 90% of annual bondable sales tax used for payment of debt service.
As shown in Figure 12, implementation of Concept 3 by 2030 will require use of bond
proceeds nearly every year. Over the 2011 to 2030 period, a total bonding level of $8.2
billion is projected to be required, or about $410.8 million per year, with all bond test
requirements achieved.
Figure 12: Annual Costs, Existing and Potential Revenue, and Debt Financing
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4. Sensitivity Tests
Three types of sensitivity tests were conducted to assess if the preliminary financial plan
provided sufficient capacity to allow for the implementation of Concept 3 by 2030 under
alternate assumptions with regard to the rates of growth in costs and revenues. These tests
included:
Increasing the base case assumption of a 4.0 percent annual capital and O&M cost
escalation rate assumed in the preliminary financial plan;
Adjusting the level of financial participation from State and federal grant programs; and
Adjusting the base case assumption of a 6.0 percent interest rate on bonded
indebtedness.
For each test, a comparison was made of the total level of bonding required to implement
Concept 3 by 2030 relative to the $8.2 billion in bonding required under the base case
assumptions in the preliminary financial plan. A graphic representation of this comparison is
provided for each sensitivity test.
4.1 Sensitivity Test: Cost Increases
The sensitivity testing for increases in cost considered two sets of scenarios. The first set of
scenarios tested the impact of increasing the annual cost escalation rate above 4 percent,
while maintaining the base case assumption of annual growth in sales tax revenues. The
second set of scenarios tested the impact of increasing the annual cost escalation rate
above 4 percent with commensurate decreases in the annual rate of growth in sales tax
revenues.
4.1.1 Increased Cost Escalation Rate
Under this set of tests, annual capital and O&M costs were assumed to grow at rates
exceeding the 4.0 percent rate assumed in the base case, while maintaining the
annual rate of growth in sales tax revenues. Sensitivity tests were conducted to
determine the impact of increasing the annual cost escalation rate to:
Increasing the annual rate of cost growth by 0.5 percent, to 4.5 percent;
Increasing the annual rate of cost growth by 1.0 percent, to 5.0 percent; and
Increasing the annual rate of cost growth by 4.0 percent, to 8.0 percent for two
years (2009 and 2010) and then returning to 4.0 percent annual cost increase
over the 2011 to 2030 period.
As shown in Figure 13, the results indicate that in order to implement Concept 3 by
2030, total bond levels would need to increase from the base case of $8.2 billion to:
$12.1 billion for a 4.5 percent annual cost escalation rate;
$16.3 billion for a 5.0 percent annual cost escalation rate; and
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$13.0 billion for an 8.0 percent cost escalation rate spike for two years and then
a return to the 4.0 percent base case annual cost escalation assumption.
Figure 13: Total Bonds Issued: Cost Growth Increase
4.1.2 Sensitivity Test: Increased Cost Escalation Rates with Commensurate Reductions in Sales Tax Growth Rates
This set of sensitivity tests considered the impact of annual sales tax revenues
diminishing at the same rate as costs are projected to increase. Sensitivity tests
were conducted to determine the impact of:
Increasing the annual rate of cost growth by 0.5 percent, to 4.5 percent, while
decreasing the annual rate of sales tax revenue growth by 0.5 percent;
Increasing the annual rate of cost growth by 1.0 percent, to 5.0 percent, while
decreasing the annual rate of sales tax revenue growth by 1.0 percent; and
Increasing the annual rate of cost growth by 4.0 percent, to 8.0 percent for two
years (2009 and 2010) and then returning to 4.0 percent annual cost increase
over the 2011 to 2030 period, while decreasing the annual rate of sales tax
revenue growth by 3 percent for two years and then returning to the annual rates
developed by GSU for the 2011 to 2030 period.
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As shown in Figure 14, the results indicate that in order to implement Concept 3 by
2030, total bond levels would need to increase from the base case of $8.2 billion to:
$17.3 billion for a 4.5 percent annual cost escalation rate and 0.5 percent
decrease in annual sales tax revenue;
$26.6 billion for a 5.0 percent annual cost escalation rate and 1.0 percent
decrease in annual sales tax revenue; and
$18.9 billion for an 8.0 percent annual increase for two years (2009 and 2010)
and then returning to 4 percent annual cost increase over the 2011 to 2030
period and a 3 percent decrease in annual sales tax for two year and then
returning to the annual rates developed by GSU for the 2011 to 2030 period.
This analysis indicated that the system-wide annual ending balance and MARTA
bond tests would be achieved for five of the six sensitivity tests conducted. However,
under the test assuming a 5.0 percent annual cost escalation rate and 1.0 percent
decrease in annual sales tax revenue, the system-wide annual ending balance and
MARTA bonds tests would fail beginning in 2027. This means that the preliminary
Concept 3 implementation plan could not be implemented by 2030 under this
scenario.
Figure 14: Total Bonds Issued: Cost Increase and Sales Tax Revenue Reduction
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4.2 Sensitivity Test: State and Federal Funding Participation
The sensitivity testing of State and federal grant funding participation levels considered
three scenarios. Two scenarios tested the impact of increased State funding participation
and the third scenario tested the impact of reduced FTA New Starts funding.
4.2.1 Increased State Revenue
The base case assumptions in the preliminary financial plan call for the State to fund
10 percent of heavy rail, high capacity regional rail, commuter rail and suburban bus
capital costs. Sensitivity tests were conducted to determine the impact of the State
participation in these Concept 3 program components increasing to provide:
10 percent operating revenue in addition to the base case assumption of
providing 10 percent of capital costs; and
25 percent operating revenue and 25 percent of the capital costs.
As shown in Figure 14, total bonding levels required for these scenarios would
decrease from the base case of $8.2 billion to $7.6 billion and $1.2 billion
respectively.
4.2.2 Reduced FTA New Starts Funding
As stated earlier, the base case assumption in the preliminary financial plan is that
FTA New Starts funds will provide 20 percent of the capital funding required for the
heavy rail, high capacity regional rail, and commuter rail components of Concept 3.
This includes an assumption that the 20 percent in FTA funds will include credit for
the Fast Tracks costs initially paid 100 percent locally over the 2009 to 2015 period,
with FTA funding to be received over the 2016 to 2030 period.
For this sensitivity test, it was assumed that FTA’s 20 percent capital cost share
would exclude credit for the 100 percent local funding provided for Fast Tracks
projects costs, resulting in a reduced level of FTA funding. As shown in Figure 14,
the reduction in FTA funding would result in bonding levels increasing from $8.22
million in the base case to $8.92 million.
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Figure 15: Sensitivity Test: Grant Revenue
4.3 Sensitivity Test: Changes in Bond Interest Rates
Since issuing debt is a key component of the Concept 3 preliminary financial plan, sensitivity
tests were conducted to determine the impact of increasing or decreasing bond interest
rates. The base case assumption in the preliminary financial plan calls for bonds to be
issued at a 6 percent interest rate. The two sensitivity test scenarios analyzed the effect of
decreasing and increasing the interest rate by 0.5 percent, to 5.5 percent and 6.5 percent
respectively. As shown in Figure 16, compared to the $8.2 billion in bonding required in the
base case, bonding levels would decrease to $7.9 billion in the decreased rate scenario and
would increase to $8.7 billion in the interest rate increase scenario.
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Figure 16: Sensitivity Tests: Changes in Bond Interest Rates
4.4 Sensitivity Tests Summary Results
Figure 17 illustrates in ascending order the comparative impact of the 11 sensitivity tests on
the level of bonding required for the Concept 3 program. With the exception of the 5 percent
annual increase in costs and 1.0 percent decrease in annual sales tax revenue scenario,
Concept 3 could be implemented by 2030 under 10 of the 11 scenarios. As shown in
Figure 17, the 1.0 percent cost increase / revenue decrease scenario would require a
significant increase in bonding to implement the program by 2030.
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Figure 17: Sensitivity Tests Summary Results
Figure 17 suggests that the level of state participation in the program could have a significant impact
on the development of the program. However, it also suggests that external factors such as overall
inflation and sales tax growth will have a significant impact on the ability of the region to implement a
program such as Concept 3.
5. Public-Private-Partnerships
Public-Private-Partnership (PPPs) provide a potential tool to assist with implementing some
projected higher performing Concept 3 projects. According to the American Public
Transportation Association (APTA) Task Force on Public-Private Partnerships white paper
“Public-Private Partnerships In Public Transportation: Policies and Principles for The Transit
Industry”, by definition:
A public-private partnership is a contractual arrangement between a public or
governmental agency and a private entity that facilitates greater participation
by the private entity in the delivery and operation of an infrastructure project,
facility or service. Typically, within the transport sector, such an arrangement
involves one or more aspects of the funding, financing, planning, design,
construction, operation and maintenance of a transportation facility. Within
the commonly utilized context of financing and/or delivering projects, a public-
private partnership is an approach or mechanism that is utilized to move the
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funding process from a single strategy of governmental aid through grants to
regional and local authorities, to a more diversified approach involving
increased utilization of private capital markets. In some cases – generally
outside the United States – private firms have injected capital into the building
and construction process of new and improved transit capital facilities, in
anticipation of an acceptable level of return on investment which may be
delivered through farebox revenues, public subsidies, and/or
performance/availability payments. Of course, capital is only one of the
requirements for success: good projects and good management are also
necessary.
As stated above, the primary objective of PPPs is to improve/enhance project development
and/or service delivery through creative approaches to sharing project risk. When entering
into a PPP agreement the private and public sectors have different expectations:
Private Sector Expectations: Increased professional service opportunities and/or
financial/investment opportunities, in return for an acceptable rate of return based on risk
Public Sector Expectations: Combination of lowered cost, expedited delivery,
improved service quality, new technology, risk reduction, increased technical/managerial
expertise
Potential benefits of PPPs include:
Expedited completion compared to conventional project delivery methods;
Potential project cost savings;
Improved quality and system performance including use of innovative management
techniques;
Substitution of private resources and personnel for increasingly constrained public
resources ; and
Potential access to sources of private capital.
The APTA Task Force on PPP also developed seven principles for PPPs as a means of
assuring that such partnerships protect both the public interest and provide commensurate
benefit for private partners. From the Task Force’s white paper “Public-Private Partnerships
In Public Transportation: Policies And Principles For The Transit Industry”, the following
principles were designed to provide a potential framework for assessing the efficacy of
PPPs for funding, financing, and delivering public transportation services and facilities.
Principle 1: Public-private partnerships are a tool in the transit toolbox. PPPs
should be viewed as one of a number of techniques and mechanisms for funding,
delivering and sustaining transit facilities and services. PPPs can be used
successfully for a variety of purposes, including delivery of major projects, provision
of cost-effective services, and utilization of contractual relationships to improve
quality and timeliness of capital projects and services. However, PPPs should not be
viewed as an ultimate funding solution in the absence of other resources, but as a
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complement to existing and traditional sources of funding for service expansion,
modernization, and infrastructure investment.
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Principle 2: Public-private partnerships should be structured to maintain the
public interest. In the vast majority of circumstances, control and oversight of the
public asset – the facilities and services provided to the public – must remain with an
entity whose “client” is the public interest. Thus, the governmental or public entity
that holds this responsibility must carefully evaluate the transfer of risk and
concomitant transfer of control within a proposed public-private partnership to assure
that these transfers bring commercial benefits and foster creative use of non-
traditional resources, while maintaining sufficient control/oversight to assure the
preservation and sustainability of the public interest.
Principle 3: Public-private partnerships should be utilized as a strategy to
achieve public goals and support long-range regional plans. PPPs are often
proposed and implemented as a means of implementing projects or selling/leasing
assets in ways that do not directly support regional goals for multi-modal transport
investment. There have been projects or asset sales done primarily because they
could be done, not because such undertakings achieved outcomes that met a
regional prioritization of transportation infrastructure investment. Thus, public
transportation assets should not be sold simply for the sake of general revenue
enhancement, especially if the generated revenues are used for purposes other than
for improving transportation facilities and/or services.
Principle 4: Public-private partnerships are most effective in those cases
where a long-term revenue stream can be assured. Some agencies believe that
the private sector can be a viable source of funding when no tax or general revenues
are available and no identifiable revenue stream exists. The reality, of course, is that
the private sector can only be a useful partner in those cases where financing – as
contrasted to funding – is the issue, or in those rare cases where capital invested at
risk by a private partner has a strong probability of generating a long term return on
that investment. In order for such a return to be generated, the presence,
predictability and stability of a long-term revenue stream in mandatory.
Principle 5: Public-private partnerships should be based on constructive and
beneficial sharing of risk. One of the key premises underlying public-private
partnerships is the beneficial sharing of risks inherent in project development. This
means that the public sector and private sector assume respectively those risks
which each are best suited to accept. For example, a common risk allocation may be
for the private sector to accept the risks inherent in the cost and timeliness of
construction, while the public sector is more capable of accepting the risks
associated with environmental clearance, public acceptance, and ridership/revenue
for development of a capital project.
Principle 6: Public-private partnerships should be used constructively for
increasing procurement flexibility and project effectiveness. There are many
opportunities for maximizing the competitiveness and performance of capital or
operating assets through creative utilization of private resources. Numerous
examples exist in the literature that demonstrate significant cost and time savings
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owing to private contracting. However, in some states, PPP deployments are
obstructed by procurement statutes that have not kept pace with the emergence of
PPPs, inhibiting some agencies from PPP deployments. In addition, where life-cycle
costs and benefits are considered, the tax consequences of long-term private
investment may substantially reduce the required public subsidy for transit facilities
and services. Thus, utilizing federal tax policy as an instrument for promoting PPPs
can be a clearly positive action, presuming that tax revenue lost through such
mechanisms is less than the direct federal investment necessary to achieve the
same outcome through a traditional grant-in-aid approach.
Principle 7: Public-private partnerships for tolling and other forms of
congestion pricing should be structured to increase transit usage. The concept
of “high performance corridors” is gaining traction, particularly in light of energy
saving and global climate change. Increasing the transit share should be a desirable
objective in any undertaking to reduce congestion, improve air quality, and reduce
dependency on foreign oil.
5.1 Opportunities for Public-Private Partnerships in the Concept 3 Program
The Concept 3 program provides a variety of potential opportunities for private sector
participation in project implementation and operation. These opportunities include private
sector involvement in:
Project acceleration
Advancement of multiple projects simultaneously
Financial participation
Joint equipment / rolling stock purchase
Transit oriented development / joint development
Outsourcing of:
o Operations
o Maintenance
The TPB, MARTA, and the participating agencies could assist the private sector in
identifying opportunities for public-private partnerships by providing background information
about the projects comprising the program. Such information could include the level of prior
study, environmental status, projected patronage, and estimated capital and operating costs
of the projects in the program sufficient for the private sector to screen for opportunities of
interest. Conversely, the agencies could target particular projects and/or program
components as public-private partnership opportunities.
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6. Key Findings
The preliminary financial plan for Concept 3 identifies potential funding sources; levels of
local, State, and federal financial participation; and a conceptual financing strategy that
would allow for the implementation and operation of the program by 2030. Over time,
Concept 3 will be refined from a regional transit vision to a detailed program of projects, with
associated refinement in the funding sources, levels of financial participation, and financial
strategy required for implementation.
The preliminary sources and uses of funds associated with the Concept 3 program are
summarized in Table 5. As show in the table, the key funding and financing concepts
comprising the preliminary financial plan for Concept 3 include the following:
Implement a region-wide one-cent sales tax equivalent. Revenue from this source
would provide a long term, stable revenue source to allow for the issuance and
repayment of long term bonds for capital, provide revenue to support annual
system-wide O&M costs, and achieve and maintain the system in a state of good
repair;
Secure State participation in funding the capital costs associated with the regional
and multi-county high capacity transit components of the Concept 3 program. These
include the heavy rail, high capacity regional rail, and commuter rail components of
the program, as well as the freeway bus rapid transit and suburban bus
components. As shown in the sensitivity tests, State participation in funding of
operating costs would further strengthen the financial plan;
Work with the Federal Transit Administration to define a candidate program of fixed
guideway projects for FTA New Starts funding. In addition, pursue federal
discretionary and formula grant opportunities to fund system-wide costs for capital,
O&M, and state of good repair;
Develop a phasing strategy to facilitate accelerated implementation of the Concept 3
program and to balance projected capital and operating costs with projected
revenues. Incorporate opportunities to accelerate implementation through issuance
of short term and long term debt to address annual funding shortfalls;
Identify and secure supplementary sources of funding and opportunities for cost-
sharing, including the potential for tax allocation district funding and value capture
from transit oriented developments; and
Work with the private sector to identify potential opportunities for public-private
partnerships to facilitate program implementation and service delivery.
The ability to pursue and implement the assumptions listed above will require the
continuation of the regional partnership that was initiated and enhanced through the TPB
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process. The region’s transit officials will need to speak as a unified voice to a variety of
audiences including the following:
The State legislature to establish the ability to enact a one-cent regional sales tax
and to request and obtain capital funding for multi-jurisdictional Concept 3 projects;
The Region’s federal Congressional delegation to develop a comprehensive plan to
apply for and obtain FTA New Starts funds and discretionary funds for State of
Good Repair projects; and
The general public to educate and promote the need for and the benefits of Concept
3 in anticipation of a referendum to implement a possible region-wide transportation
sales tax.
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Table 5: Concept 3 Sources and Uses of Funds Summary
Costs Total Subtotals
Operating Costs $30,331.13
Existing Regional System $21,279.85
Fast Track Projects $4,003.03
Remainder of Concept 3 Projects $5,048.25
Capital Costs $42,542.48
CIP and State of Good Repair Capital $6,358.14
Fast Track Projects Capital $3,168.18
Remaining Illustrative Program Capital $29,746.15
Retire Commercial Paper $3,270.00
Debt Service $6,345.37
MARTA Current Debt Service $2,116.10
Interest on Commercial Paper $349.80
Concept 3 Debt Service $3,879.47
Revenues
Operating Revenues $34,017.40
Total Existing System O&M Revenue $14,093.08
FTA Section 5307 Regional Balance $378.26
Farebox Revenue - Fast Tracks Projects $1,000.76
Farebox Revenue - Remainder of Concept 3 $1,262.06
Sales Tax (12 + Existing MARTA-equivalent ) $16,609.13
Advanced from Beginning Balance $674.11
Capital Revenues $50,256.07
Net Operating Revenue $3,686.27
Federal Funds
Existing Regional System Formula (5309, CMAQ, STP) $1,063.34
Existing Regional System State of Good Repair Discretionary $1,271.63
Concept 3 FTA New Starts (Heavy, Regional, & Commuter Rail) $4,869.81
State Funds
Existing Regional State of Good Repair $63.58
Concept 3 Heavy, Regional, Commuter Rail, and Suburban Bus Funds $2,400.01
Concept 3 Freeway Bus / HOT lanes $1,472.24
Local Funds
Existing MARTA Sales Tax $5,845.89
Proposed Sales Tax (12 + equivalent in existing MARTA counties ) $16,609.13
Other (Beltline TAD) $639.18
Other (TIP Funds) $574.31
Debt Issues
Commercial Paper $3,545.0
Bond Proceeds: Fast Tracks $1,121.7
Bond Proceeds: Remainder of Concept 3 $7,094.0
Concept 3 Financial Analysis Report Atlanta Transit Planning Board
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Appendix A: Fast Tracks Early Action Plan
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Fast Tracks Early Action Program Assumptions
The following summarizes the projects identified for the Fast Tracks Early Action Plan based on
TPB staff’s October 2008 Updated Transit Planning Board Illustrative Programming
Assumptions Memorandum.
1. I-20 East – CDB to Gallery @ S. DeKalb Regional Rail
a. Low Estimate 2030 Segment Daily Boardings: 19,000
b. Possible Local Match for Federal Funds for Full I-20 East Line
c. Some initial planning work for this project in terms of demand, corridor
characteristics and potential station locations has been performed
2. Marietta to Cumberland Regional Rail
a. Low Estimate 2030 Segment Daily Boardings: 10,000
b. No river crossings, potential to combine maintenance at existing CCT facility in
Marietta
c. This project allows completion on the southern portion of the Cobb Regional Rail
trunkline, including the maintenance facility, while the design, construction and
environmental challenges of the segments to Perimeter Center and
Downtown/Midtown Atlanta are resolved.
3. The first quarter of the Atlanta Beltline Project.
a. Low Estimate 2030 Segment Daily Boardings: 10,000
b. Funded Locally through TAD
c. A large amount of initial planning has already been completed or is in process in
the Fall 2008 by MARTA and Atlanta Beltline, Inc.
4. Peachtree Streetcar Phase 1
a. Low Estimate 2030 Segment Daily Boardings: 9,400
b. Funded locally through CID or City of Atlanta Parking
c. The Peachtree Corridor Partnership and other groups have advanced some initial
planning on this project.
5. Downtown Griffin Commuter Rail
a. Low Est. 2030 Segment Daily Boardings: 3,100
b. Implemented by GDOT, inclusive of Spalding County
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c. This project has had extensive environmental work completed, though some of it
may need updating.
d. This project is also funded through Lovejoy in the 2009-2013 TIP
e. Route is also part of the Southeast High Speed Rail corridor
Additionally – in preparation for rail service along segments in phase 2, Pre-Rail Arterial Rapid
Bus would start (as part of the 25 percent expansion) in the following corridors in preparation for
future rail service:
1. GA 400 – Not rail in Early Action Program because of river crossing, location of
maintenance facilities – Potential 2021 opening
2. Cumberland – Perimeter – Not rail in Early Action Program because of river
crossing. Could be implemented as an upgrade of the existing MARTA route 148. –
Potential 2018 opening
3. Cumberland – Downtown/Midtown – not rail in Early Action Program because of
river crossing. Could be implemented as an upgrade on the existing CCT route 10.
– Potential 2022 opening
4. Norcross – OFS – Not rail in Early Action Program because of isolated segment
and dependence upon redevelopment of OFS site – Potential 2016 opening
Fast Tracks Arterial Rapid Bus Segments, that could in the future become rail, but are not
envisioned currently, include:
1. Fulton Industrial Blvd
2. South Fulton Parkway
3. Memorial Drive (Avondale/Kensington to Stone Mountain and Snellville)
4. Extension to Snellville because of transfer with Regional Suburban Bus network in
Snellville
5. Campbellton Road
The entire regional suburban bus network is also included in the Fast Tracks Early Action
Program and Park and Ride Development remains unchanged from the existing TIP. Finally,
planning for some of these projects is assumed to take place prior to 2011 and identification of
the new funding source. This planning work is assumed to be in the regular planning budgets
and includes such necessary items as the OnBoard Survey, on-going TPB staff activities, and
ongoing regional planning.